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Promoting Innovation: The Differential Impact of R&D Subsidies

Reda Cherif, Fuad Hasanov, Christoph Grimpe and Wolfgang Sofka

No 2022/192, IMF Working Papers from International Monetary Fund

Abstract: We investigate the effect of R&D subsidies on firms’ innovation by ownership, industry, and firm size using German firm-level data. The impact of R&D subsidies is heterogeneous across industries for multinational corporations (MNCs) and domestic firms while it does not differ substantially by firm size. Domestic firms have a larger response in R&D spending in low-tech manufacturing, knowledge-intensive services, and technological services while the response of domestic and foreign MNCs is broadly similar and is greater in medium-tech and high-tech manufacturing. Foreign MNC subsidiaries’ response in terms of patents is greater than that of domestic MNCs in most industries.

Keywords: Innovation; patents; research and development; R&D; subsidies; multinationals; investment; technology policy; R&D subsidy; high-tech manufacturing; subsidiaries' response; low-tech manufacturing; R&D spending; Transnational corporations; Manufacturing; Services sector; Government subsidies; Investment policy; Global (search for similar items in EconPapers)
Pages: 41
Date: 2022-09-23
New Economics Papers: this item is included in nep-com, nep-cse, nep-eur, nep-ino, nep-int, nep-knm, nep-sbm and nep-tid
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